The cholesterol you eat is not the cholesterol that ends up in your blood stream. Your body breaks down the cholesterol you eat and makes its own cholesterol out of sugars, sugars derived from dietary sugars and excessive carbs. There, Atkins' 560 page book reduced to a single paragraph.
1 Wrong mostly - you can absorb cholesterol from food, but it's slow and inefficient.
2 No, not really. The "breakdown" of cholesterol doesn't happen too efficiently at any point. It either gets made into bile acids or hormones and neither is made in great amounts. The rest gets stored in the liver or other places.
3 Cholesterol can be made from fat, sugar, protein, ethanol, acetate, virtually any food source.
Was Atkins really that much of a BSer? Never read his book.